Moneycontrol
Feb 16, 2017 03:17 PM IST | Source: Moneycontrol.com

Hold Hindustan Zinc; target of Rs 300: ICICI Direct

ICICI Direct recommended hold rating on Hindustan Zinc with a target price of Rs 300 in its research report dated February 13, 2017.

Hold Hindustan Zinc; target of Rs 300: ICICI Direct


ICICI Direct's research report on Hindustan Zinc


The company reported a gross operating income of Rs 5384.0 crore. After adjusting for excise duty, net operating income for the quarter was at Rs 4979.9 crore (up 45.2% YoY, 41.2% QoQ, marginally higher than our estimate of Rs 4852.8 crore). Zinc sales volume for the quarter were at 211000 tonnes (up 3.4% YoY, 42.6% QoQ, higher than our estimate of 200000 tonnes).


Outlook


HZL broadly reported an in line performance for Q3FY17. On the back of the recent strength witnessed in zinc prices, we have upward revised LME zinc estimates to US$2300/tonne for FY17E (from US$2250/tonne earlier) and to US$2750/tonne for FY18E (from US$2400/tonne earlier). We value the stock at 7x FY18E EV/EBITDA and arrive at a target price of Rs 300. We have maintained HOLD rating on the stock.

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